Home Loans: Get Your Interest Down

Over the past few years, banks have introduced different pricing per customer, and you will often get a very substantial discount if you fall for the more favorable treatment.

I asked my former colleague, who is still a credit broker (Good Finance Loans.com), to find out how to get into a better customer category with each bank.

Got it on the occasion because every time I write about loans, my turnover always jumps up and tells me where my best customers come from.

Here’s a look at how you can hack the system to pay less on your home loan.

What factors do banks take into account when pricing / discounting loans, or how do we reduce the interest rate on our future loan?

Coverage ratio (amount of loan taken / value of real estate collateral)
Ideal ratio: below 45-55%. That is, borrow up to half the price of the property. (The editor notes: I don’t think you should start buying a home until you have at least half your money.)

Which financial institutions do you count on?


How to Influence: Involve additional real estate collateral to lower your coverage ratio below the desired value. (For the sake of illustration, 80% of the fund would need a loan, but due to the involvement of a kinsman, the coverage ratio would be 40%.)

Be sure to consider the additional costs involved in adding additional cover (valuation (approx. $ 30- $ 40,000), land registry fees ($ 12,600 + $ 6,600), ownership card / copy of the map ($ 1,260- $ 6,000), and the greater risk, if any. yet we could not pay the loan, two properties could swim for it.

Income burden (installments / monthly income of borrowers)
Ideal ratio: below 30%. That is, less than 30% of all debtors’ official income goes to repay loans.

All existing loans will be taken into account. For overdrafts and credit cards, the total credit line is counted (!!) even if you do not use the credit line at all (Especially for OTP bank customers it is worth looking at before taking out a mortgage loan. 5% is taken into account as a loan repayment on income).

Which financial institutions do you count on?


Before borrowing, terminate your overdraft facility and credit card, or at least bring it down to a minimum. (can be restored after the loan is disbursed).
Repay existing loans, if possible, prior to taking out a mortgage, or replace it with a more favorable loan in parallel. Involvement of a debtor.
In the case of a home loan, extending the term and paying LTP along with the loan may be a good solution in some cases. (That is, if we intend to pay off the loan in 7-8 years, we would prefer to take it for 20 years for a better interest rate and then pay it off at the first opportunity. But remember that it has a one-off cost of 1%, though it is much cheaper than paying 1% more interest per year.)

The amount of credit to the bank account

The amount of credit to the bank account

How can we influence it?
We collect all of our income, income, plus the income of our spouse, the survivor’s pension, and whatever we can, into the repayment bank account. If you hit us, you will be able to redirect your salaries and pensions to other accounts.

The amount of credit required

Over certain amounts, interest rates on loans are getting cheaper. (A bank needs a five million home loan better than one less and even more a ten million.)

If you are not too far from the limit, it is worth considering what happens when we take a little more to skip a threshold and then prepay the surplus at the first opportunity. A good annuity calculator will help you calculate how much you will gain on total credit.

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